Should Congress rescind subsidies for electric cars?

POINT/COUNTERPOINT

July 31, 2010

Congress is considering an electric vehicle bill that has the support of the White House. It would spend up to $6 billion to give a financial jolt to research and production of the fledgling electric-car industry. The bill includes financial subsidies and incentives for manufacturers and consumers and for development of better car batteries that can last for 500 miles before needing to be charged. Today, The Morning Call presents opposing perspectives about the value of subsidies for the electric car industry and consumers.

Clean-energy goal requires extension

It is politically fashionable to denounce federal subsidies as unjustifiable in the face of rising budget deficits and an ailing economy. Like pork-barrel spending, however, the value of subsidies depends on where one stands.

Republicans have long favored traditional energy resources such as coal, oil, natural gas and nuclear power, and they still support costly federal subsidies for them. Democrats have been more partial recently toward subsidies for developing renewable energy sources such as wind and solar.

What about subsidies for electric vehicles? President Obama backs congressional efforts to spend an additional $6 billion to $10 billion on economic incentives for purchase of plug-in, battery-powered electric vehicles as part of his commitment to advancing a clean energy economy. Many Republicans have opposed, and even ridiculed, these actions.

The federal government will offer new tax credits of up to $7,500 for purchase of vehicles such as the Nissan Leaf and Chevrolet Volt; for many consumers there will be additional state incentives.

These subsidies are intended to accelerate market growth; the current market is small because of the vehicles' costly batteries and limited range. Yet the price likely will decline over time with added sales and further research that can improve battery power.

The Obama administration has supported electric vehicles in many other ways as well, such as advanced technology grants and loans to battery and vehicle manufacturers, and construction of public recharging stations.

Because fully electric cars use no gasoline, there should be big improvements over time in urban air quality and release of greenhouse gases.

Consumers would save as well with lower maintenance costs. Yet how the electricity is generated is important. Burning coal to produce electricity for recharging the cars' batteries is not really environmental progress.

Another reason to use such subsidies is that the United States needs to become a global competitor in innovative energy technologies. China, Japan and Korea lead the world market in lithium-ion batteries that power electric vehicles; this is a market that is likely to grow substantially, creating manufacturing jobs. The United States cannot afford to fall behind here as it has already in wind and solar technologies and high-speed rail.

The development and marketing of electric vehicles also should be encouraged to reduce the nation's use of oil. Aside from the continuing risk of spills, dependency on oil is harmful to the economy, national security and the environment. We have only 2 percent of world oil supplies yet we use 20 percent, much of which goes to power our vehicles. Such a use of oil, whether produced domestically or imported, is not sustainable and not good for the country.

If Republicans take control of Congress after the fall elections, they should not try to repeal the electric vehicle incentives. While doing so could cut federal spending modestly, the savings would be minuscule compared with many other possible budgetary actions, such as reducing wasteful defense spending or curtailing unneeded subsidies for the oil and gas industry.

Republicans also must rethink their positions on environmental and energy policy. To oppose actions that improve the environment and public health at reasonable cost makes little sense for a party that aspires to majority status. Continuing to do so, including challenging efforts to deal with climate change, may play well with tea party enthusiasts but it cannot help the party win over the majority of Americans who take these issues seriously.

Republicans would do better to demand that electric vehicle and other clean-energy policies be well designed and effectively implemented, and that they be phased out as technology advances and the need for them diminishes. Some moderate Republicans in Congress favor such policy changes and they are working on them with their Democratic colleagues. Others should join them.

Michael Kraft is the Herbert Fisk Johnson Professor of Environmental Studies at the University of Wisconsin-Green Bay, and the author of "Environmental Policy and Politics."

Electric car subsidies deserve negative vote

In the current hype about electric vehicles, too little attention has been paid to the checkered history of subsidizing alternative energy technologies.